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TMI Blog2024 (1) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... rliest. Applications filed by the petitioner and its Directors for compounding of the offences u/s 200, 204 read with Rule 30 of the Income Tax Rules, 1961 on 25.11.2022 were clearly beyond the time prescribed in the Circular dated 16.09.2022 issued u/s 119 of the IT Act, 1961. There is no limitation prescribed for compounding of the offences committed by an assessee u/s 279(2) of the IT Act, 1961. It is only in para 7(ii) to the above mentioned Circular, it has been stated that in a case where prosecution complaint has already been filed in a court of law, the application for compounding of offence cannot be filed later than 12 months from the end of the month of filing of the complaint before the Court. There is exception to the above rule in Para 9.1 of the same circular as in deserving case, the restrictions in Para 7(ii) can be relaxed with the approval of the Principal Chief Commissioner within beyond 24 months but before the expiry of 36 months from the date of the complaint before the Court. The limitation in the above circular cannot bind either the petitioner or this Court. The limitation in the Circular is not mandatory. It is to be construed as directory. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner is aggrieved by the impugned Common Order dated 19.01.2023 bearing Ref.F.No. Compounding/CHEJ03226G/2022-2023 passed by the first respondent under Section 279(2) of the Income Tax Act, 1961. (hereinafter referred to as the IT Act, 1961). 2. By the impugned Common Order, applications filed by the petitioner and its Directors on 25.11.2022 to compound the offence committed by them for failure to pay the Tax Deducted at Source (TDS) for the Assessment Year 2013-2014 and the Assessment Year 2014-2015 respectively has been rejected by the first respondent. Operative Portion of the impugned Common Order reads as under:- 5.1 An assessee is required to file application for compounding before the Competent Authority as per Para 7(ii) and 9.1 of the Board's guidelines for compounding of offence in F.No.285/08/2014- IT(Inv.V)/196 dated 16.09.2022, which is reproduced as under:- Para.7.(ii) The compounding application may be filed suo-moto at any time after the offence(s) is committed irrespective of whether it comes to the notice of the Department or not. However, in a case in which prosecution complaint has already been filed in a court of law it should be filed no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances. 5. Thereafter, the third respondent issued notice to the Director of the petitioner to be treated as Principal Officers. The petitioner replied to the notices on 08.03.2017 and stated that a sum of Rs. 12,00,000/- was paid on 07.03.2017 and sought permission to pay the balance amount in installments. 6. The second respondent thereafter invoked the provisions of Section 276B of the IT Act, 1961 to prosecute the petitioner and its Directors. The case for personal hearing was fixed on 14.04.2017. 7. In support, the learned counsel for the petitioner has placed reliance on the following decisions:- I. C.R.N.Investments (P.) Limited Vs. Chief Commissioner of Income Tax , (2023) 146 Taxmann.com. II. K.M.Mammen Vs. Principal Commissioner of Income Tax , (2022) 445 ITR 226. III. Foot candles Film (P.) Vs. Income Tax Officer , (2023) 453 ITR 402. IV. Vikram Singh Vs. Union of India , (2017) 394 ITR 746. V. G.P.Engineering Works Kachhwa Vs. Union of India , (2022) 446 ITR 563. VI. Ramesh Jain Vs. Union of India , (2023) 146 Taxmann.Com 320. VII. V.A.Hasseb Co. Vs. Chief Commissioner of Income Tax , TDS , (2017) 245 Taxman. V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore requested to confirm the names and address of such persons. 4. Before the grant of prior sanction under Section 279(1) of the Income Tax Act, 1961. You are hereby accorded an opportunity of being heard by posting your case for hearing on 14.04.2017 at 3.00 p.m. at my above given address. Kindly note that any failure to avail this opportunity either in person or in writing would be construed as enough there is no objection on your part to proceed with the prosecution proceedings initiated, subject to the relevant provisions of the income-tax Act, 1961. 5. An option to get the offence compounded is available for your benefit. 12. It is submitted that despite notice being given to the petitioner, the petitioner failed to approach the authority for compounding offence in time. 13. The learned Senior Standing Counsel for the respondents has placed reliance on the following decisions:- i. U.P.Chawla Vs. M.P.Tiwari , (1992) 63 taxmann 538 (SC) ii. M.V.Jawali Vs. Mahanjan Borewall Co., (1997) 95 taxmann.com 306 (SC). iii. Vikram Singh Vs. Union of India , (2018) 89 taxmann.com 327 (Delhi). iv. Viraj Exports (P.) Limited Vs. Chief Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d clarified that the period from 15.03.2020 till 28.02.2022 shall stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and Provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the Court or Tribunal can condone delay) and termination of proceedings. It is submitted that the said benefit is not available to the petitioner. 17. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondents. 18. I have also perused the applications filed by the petitioner on 25.11.2022. The respective applications filed by the petitioner are bereft of the details required for compounding the offence. 19. Under Section 279(2) of the IT Act, 1961, the Principal Chief Commissioner, Chief Commissioner, Principal Director General or the Director General, as the case may be, can compound any offence committed by an assessee, which is punishable under Chapter XXII of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he offence. This is also not a case where the petitioner has been convicted of the offence in E.O.C.C.Nos.193 and 194 of 2018 and had filed the applications for compounding of the offence thereafter under Section 279(2) of the IT Act, 1961. 27. The applications filed by the petitioner for the respective Assessment Years for compounding the offence are bereft of details. Therefore, even if the limitation prescribed in Circular dated 16.09.2022 bearing Ref.F.No.285/08/2014-IT(Inv.V)/196 of the Central Board of Direct Taxes (CBDT) issued under Section 119 of the IT Act, 1961 was overlooked, there was no material available with the first respondent to determine whether the petitioner otherwise deserved to compound the offences. 28. As the respective application filed by the petitioner are bereft of the details required for compounding the offence, it is the view of the Court that the petitioner can be given an opportunity to explain the case properly, as in deserving and appropriate cases, applications to compound the offence cases can be allowed to be filed. There is no point in prosecuting an assessee whose conduct may otherwise warrant compounding of offence(s). As long as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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